China’s April exports unexpectedly fall but imports rebound as trade talks loom
BEIJING: China’s exports unexpectedly shrank in April but imports surprised with their first increase in five months, painting a mixed picture of the economy as Beijing and Washington make a last-ditch bid for a trade deal before a hike in US tariffs.
The latest trade data, which would normally be poured over for clues on how the world’s second-largest economy is faring, has been totally eclipsed by worries that the US-China trade war is escalating, rather than nearing a resolution as many investors had expected.
High-level Chinese and US negotiators will meet in Washington in the next two days, as Beijing tries to avoid a sharp increase in tariffs on its goods ordered by President Donald Trump to take effect on Friday.
Investors have been hoping that China’s April trade data would add to signs that its economy is beginning to steady, easing worries about cooling global growth.
Exports fell 2.7 per cent from a year earlier, customs data showed on Wednesday (May 8). Economists polled by Reuters had expected growth to slow to 2.3 per cent after March’s surprising 14.2 per cent jump, which some analysts suspected was inflated by seasonal and one-off factors.
“The outlook for Chinese exports is challenging. If Trump follows through on his latest tariff threats, we think this would drag down export growth by two to three percentage points,” Capital Economics said in a research note.
“Even if a last-minute deal is struck this week to avoid further tariffs, the downbeat prospects for global growth will probably mean that export growth remains subdued.”
POSITIVE IMPORT SURPRISE
Imports, however, beat expectations with a 4.0 per cent rise year-on-year, much better than analysts’ forecasts for a 3.6 per cent fall and March’s 7.6 per cent drop. The gain suggested some improvement in domestic demand as Beijing rolls out more stimulus, such as higher spending on roads, railways and ports.
China had a trade surplus of US$13.84 billion in April, smaller than forecasts of US$35 billion.
TRADE TALK TURNABOUT
Some analysts believe recent signs of improvement in both the Chinese and American economies may have hardened their negotiating positions on trade after months of progress when the business outlook had appeared much more shaky.
But after surprisingly strong March data from China, likely an early response to government support measures, initial April readings have been more subdued.
Factory surveys for April suggested demand was improving at a much slower rate at home and abroad, adding to the debate over how much more stimulus China needs to generate a sustainable recovery, without risking a rapid jump in debt.
Expectations of further policy support in China have intensified again after the stunning reversal on the trade front this week.
Top US trade officials said on Monday that China had backtracked on substantial commitments it made during trade talks. On Sunday, Trump said he will hike existing tariffs on US imports of Chinese goods on Friday and planned new levies on other products soon.
The swift deterioration in negotiations between the world’s two largest economies has jolted global financial markets. The Dow Jones Industrial Average, which ended Monday just slightly down, tumbled 1.8 per cent on Tuesday, and markets in trade-reliant Asia followed on Wednesday.